Here's a behind-the-scenes look at a 50-year-old architecture firm in the Central Texas, as told by one of the 2 active partners. The firm has 8 employees and focuses on retail and industrial projects.
Office Situation:
We rent and pay market rate (about $1/SF/mo) for an older suite with lesser amenities.
Salary:
Partners are compensated $10k - $12k per month, plus a tax escrow, which is market rate in our area according to the AIA Salary Calculator.
The pay is the same as being a managing employee last year vs managing partner this year (I've been Partner for 5 months). Except, as a Partner, I have to wait a couple weeks for the clients' checks to clear before I can take my distribution.
Work/life balance:
Early in my career, I found myself constantly pushing a playground swing on Sunday mornings while hammering out details with a big client. I eventually established boundaries around my working hours.
I lost the client, but he respected me more and enthusiastically sent me great referrals.
Debt:
Switching the company from sole proprietorship to partnership incurred debts of about 10% of our annual billings. Having a line of credit helps take some of the panic off the monthly budgeting.
We found a no-fee card with about 1% cash back from Truist. $25K line of credit was significantly more than anyone else. We pay certain regulatory fees and consultants on the card, so this was important.
Revenue & Profit:
Over the last 12 months, we've generated about $1.3 million in revenue.
Gross revenue remains constant but the percentage of consultant fees edges up as the project sizes get smaller. We need to find a way to charge more for our services, or increase the monthly volume.
As far as profit goes, we're not there right now.
Best Expense:
Our clients flip out when they see the erasable pen.
#1 Financial Goal:
We've been in the same suite for almost 50 years. I would love to move to one of our newer buildings or communities to showcase the work of our current generation.
Biggest Mistake:
Our local printshop stopped offering embossed lithography business cards, so we ordered regular cards and lost a senior designer over it. We found a printshop in another city to fill the next order.
Book Recommendations:
I used to have a role playing game with pages of elaborate spreadsheets of how to budget all the expenses of an imaginary military unit. Running a business is kind of like that, except on a good day we need fewer explosives.
Firm owners: Want to participate? Submit your Money Memo here